Our first Quarterly Energy Update of 2014 included an article on the close scrutiny undertaken by the Australian Consumer and Competition Commission (ACCC) of the energy sector by instigating proceedings for both misleading and deceptive conduct and unsolicited consumer agreements against a number of energy retailers.
In that edition, we considered the cases of ACCC v Australian Power and Gas Company Limited  FCA 1358 (28 November 2013) andACCC v AGL Sales Pty Ltd  FCA 1030 (11 October 2013). In this update, we explore a more recent case also involving AGL that is yet to be decided.
On 4 December 2013, the ACCC instituted proceedings in the Federal Court against AGL South Australia (AGL SA) alleging that AGL SA had contravened sections of the Australian Consumer Law (ACL) relating to false or misleading representations, and misleading or deceptive conduct. The alleged contraventions relate to AGL's supply, or possible supply, of electricity to residential consumers in South Australia under market contract energy plans (Energy Plan), which featured a discount in respect of energy usage charges.
In the ACCC's pleadings, it alleges that AGL SA contravened the ACL by:
- falsely representing to customers that by entering into an Energy Plan, they would receive a specified discount off their energy usage charges, but when AGL SA later increased the rates under the Energy Plan in the middle of 2012 it effectively eroded the benefit those customers received by entering into the Plan
- failing to disclose information about a mid-year price increase to consumers who commenced their energy plan in the first half of 2012, which resulted in these consumers paying more for electricity in 2013 than if they had been supplied by AGL SA under its standard retail contract.
The case is listed for compulsory mediation in mid May 2014, and if there is no resolution, a pre-trial conference is set for 7 August 2014, with the trial currently set to commence on 1 September 2014. In the meantime, if contractors are concerned that their current marketing practices are similar to those of AGL SA, giving rise to the proceedings, they should seek legal advice on the suitability of those practices.If the Federal Court rules in the ACCC's favour, the extent of the impact of the decision for other energy retailers will likely depend on whether they have engaged or are engaging in conduct similar to the conduct of AGL SA giving rise to the proceedings. However, as many retailers currently offer discounts calculated against a 'base rate', any decision by the Federal Court that AGL SA contravened the ACL could have a significant impact on other retailers and force retailers to change their current marketing practices.